Asset-backed/asset-based/covered social bond of the year: Caffil

The €1 billion ($1.2 billion) covered social bond issued by Caisse Française de Financement Local (Caffil) in April 2020 secured the award for its ground-breaking role as the first Covid-19 covered social bond issuer in the wake of the pandemic.

The deal by Caffil – the covered bond subsidiary of the French public development bank SFIL – impressed the judges by being the first Covid-19-related covered bond transaction, and its strong reception by the markets. The five-year €1 billion bond attracted around 130 investors and an order book of more than €4.5 billion. The order book was both the biggest ever for Caffil and the largest for a covered bond in 2020 up to that date.

The demand was such that Caffil successfully priced the bond as the first negative-yielding covered bond since early March, prior to the market downturn as the pandemic worsened. Caffil was able to tighten the spread by six basis points between initial pricing guidance and final pricing.

SFIL said the Caffil covered bond would be used to finance or refinance loans made to French public hospitals, with loans only validated after an analysis of the social benefit to their local areas. SFIL assesses social impact of each hospital through its own Healthcare Added Value score.